Oracle profit rise beats Wall Street expectations

The world's third largest software maker Oracle Corp reported profit that beat Wall Street expectations on June 26 and gave a positive growth outlook for the current quarter that nudged its shares higher. Fourth-quarter sales of new software rose 17 percent from a year ago to $2.5 billion.
Analysts had expected growth of 13 percent to 14 percent in new software sales, one of the most closely watched indicators of Oracle's financial performance. Oracle executives said the company was taking market share from rivals International Business Machines Corp, SAP AG and BEA Systems Inc.
It marked the third time that earnings topped Wall Street forecasts in the fiscal year that ended May 31. "They're firing on all cylinders," said Martin Schutz, an analyst with Hochfeld Independent Research.
Chief Financial Officer Safra Catz forecast that new software sales would rise between 20 percent and 30 percent in Oracle's fiscal first quarter, more than double the pace Wall Street analysts were expecting.
She said that forecast was conservative and that it excludes sales of its Agile software unit. Oracle estimates non-GAAP revenue will rise by 18 percent to 20 percent during the first quarter.
"We're obviously looking for it to be our largest Q1 ever," Catz said on a conference call with analysts. "We're delivering earnings growth way ahead of our target."
Analysts attribute the company's strong performance to the success of Chief Executive Larry Ellison in integrating the assets of more than $20 billion worth of acquisitions he has acquired since 2005 into the company's product portfolio. "I expected the pace to continue," Ellison said of his plans for future purchases in a conference call with analysts.
Cowen & Co analyst Peter Goldmacher said that the company's salesforce has done a good job of selling multiple products to customers once they close a deal on one piece of software.
"These guys are becoming the Costco of software," Goldmacher said. "When you go to Costco, you need one box of plastic bags. But you might end up getting eight boxes."
Programs designed to handle particular tasks unique to companies in specific industries - a type of software known as vertical applications - have proven to be effective in helping Oracle forge broader relationships with customers, Ellison said in the conference call.